I assume this is a 401k or pension lump sum payout and is eligible for a roll over into an IRA. If so that is what I would recommend with all of the cash. Assuming you are 59.5 at the time of retirement you can immediately take money out for expenses as you need them so there is no need to separate 5 years of expenses and keep it in a separate account.As to the lump sum investing vs. dollar cost averaging -- reasonable minds do differ on this subject. Mathematically it is better to invest it all at once, but, that doesn't do much for the person who invests it all to be immediately followed by a major drop in the market. For this reason I see nothing wrong with taking your time to get it invested into your desired asset allocation. You might start by putting it all into a money market fund and then monthly over 12 to 18 months move it in pieces to the desired allocations. And of course you might intentially leave some in the money market fund for your short term expenses.

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